This document defines different types of capital and shares. It discusses capital as money invested in a business to generate income. It defines authorized, issued, subscribed, and paid up capital. It also discusses initial public offerings and how the public can invest in a company through purchasing shares. The document outlines different classes of shares including ordinary shares which provide voting rights, preferred shares which have preference in dividend payments and capital repayment, and deferred shares which are paid dividends last.

1. Capital of Company
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2. Capital Definition
• Capital- Money invested in a business to
purchase assets
• Capital is one of the basic factors of production
along with land and labor
• Capital used to generate income for the
business
• May be Debt capital or Equity Capital

3. Capital in Corporation
• Initial public offering (IPO):
– For the first time
– When company sells its new shares to the public
– Also called Primary market.
• Capital:
– Investment made by public in the company
– Through purchasing shares of the company
– There are Various types of capital, to be
discussed in the upcoming slides

4. Types of Capital:
1. Authorized or registered capital
2. Issued and unissued capital
3. Subscribed Capital
4. Paid up Capital

5. Types of Capital …..
1. Authorized or registered capital:
– The amount of capital which a company can
issue.
– Also called authorized capital because the
company has this much authority to issue
capital
– This amount of capital is registered with the
registrar of the company.
– Therefore it is also known as registered capital.

6. Types of Capital …..
2. Issued and unissued capital:
• A company issue capital according to its
requirements.
• The amount capital which the company
offers out of its authorized capital to the
public for investment is known as issued
capital
• Unissued capital is that capital which is not
issued.

7. Types of Capital …
3. Subscribed Capital:
– Amount of capital for which the people
subscribe (Contribute) is known as subscribed
capital.
– It is part of authorized capital which is issued
and are offered for public subscription.
– Types of Subscribed Capital
• Over subscription:
• Under subscription:

8. Types of Capital …
3. Over Subscribed Capital
– demand for an IPO of Shares exceeds the total number
of shares issue
– In early 2012, analysts indicated that the Facebook IPO;
• IPO was about $10.6 billion by selling more than 337 million
shares at $28 to $35 per share
• In order to take advantage of the oversubscribed IPO and fulfill
investor demand,
• Facebook offered not only more shares (421 million versus 337
million) to investors but also raised the price range for its shares
to $34 to $38 per share

9. Types of Capital …
B. Under Subscribed Capital:
– Demand for an initial public offering of securities is less
than the number of shares issued.
– Also called “under booking”

10. Types of Capital
• 4. Paid up Capital:
– The capital for which the company accepts
subscription and make the delivery of shares to
the applicants
– Amount of money a company has received
from shareholders through shares.
– Paid-up capital is only created when a company
sells its shares on the primary market directly to
investors

11. Classes of Shares

12. Classes of Shares
• The capital of a corporation has been divided
into small pieces into units known as shares.
• Share:
• Instrument used by the company to get funds from
markets.
• The holders of shares are known as shareholders.
• They get dividend as a reward for the investment
made by the people who purchase shares.

13. Types of Shares
There are three types Shares;
1. Ordinary shares:
2. Preferred shares:
3. Deferred shares:

14. Ordinary Shares:
• Also Called equity shares.
• The holders of ordinary shares are the real owners
of a company.
• The ordinary shareholders have voting rights.
• They receive dividend from the profit of the
company.
• The equity share capital cannot be redeemed or
exchange during the life time of the company.
• Also called Common Shares

15. Preferred Shares:
• As the name suggests have some preferences as
compare to other shares
• Main Preferences are as following;
– Preference in dividend payment:
– Preferences in repayments of capital

16. Deferred Shares:
• Deferred shares are also known as founder’s
shares.
• They issued to the promoters of the company and
• The dividend on these shares are paid to them
after all the dividends of all shareholders are paid.